Gold tracks sideways in quiet trading
Hathaway says loss of faith in the Fed could be ‘the number one game-changer’ for gold

(USAGOLD – 10/21/2021) – Gold tracked sideways in quiet early U.S. trading as investors weighed the potential impact of the Evergrande meltdown in China, growing indications of global stagflation, and the future size and scope of the Fed’s tapering program. It is down $1.50 at $1782. Silver is down 19¢ at $24.19. This nugget of wisdom from Sprott’s John Hathaway on the tapering controversy caught our attention yesterday:

“Notwithstanding the wide array of bullish considerations (all of which deserve paragraphs of exposition that have been written elsewhere and are omitted here for the sake of brevity), the number one game-changer for gold could be a loss of faith in the U.S. Federal Reserve Board. Unshakeable confidence in the Fed’s stewardship of the financial system and the economy has been the anchor for the bull market in financial assets. That trust is at great risk, in our opinion, when (and if) tapering begins.”  (For details, please see It’s Show Time for the Fed).

Chart of the Day

overlay chart showing gold ETF inflows and outflows and the price of gold
Chart courtesy of the World Gold Council • • • Click to enlarge

Chart note: Analysts point to ETF inventory flows as an indicator of price direction because that is where institutional interest manifests itself. At the moment, institutions are essentially out of the gold market – neither buyers nor sellers, as shown in the chart. Note, too, the close correlation between price advances and declines and ETF inflows and outflows. Behavior among funds and institutions, we will add, is mercurial. The present indifference could turn to strong interest in a heartbeat given the proper impetus.

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